US tech firms forcing workers to take vacations

Financially strapped Silicon Valley companies are forcing employees to take vacations as part of a way to cut costs and deal with the slumping high-tech economy.

Many of the forced vacations are coming this week as Americans mark the July 4th Independence Day holiday, but the moves are sparking complaints rather than celebration.

At estimated 25,000 workers are being told to stay home by such Silicon Valley companies as Sun Microsystems, Xilinx and Network Appliance.

Outside of the Valley, tech companies like computer maker Compaq are also telling some 33,000 workers to take the week off.

Companies like Hewlett-Packard, beside asking their employees for voluntary salary cuts, are also telling them to take some vacation, though so far, the company is letting its workers decide when to schedule their time off.

The move is an attempt by the company to trim expenses. Although salaries are paid during the vacations, emptied offices let companies cut back on utilities, security and traditional Silicon Valley perks, such as discount cafeterias.

"Anytime you have a slowdown in technology, you're going to get these holiday shutdowns," said Michael Wero, a spokesman for the Silicon Valley Manufacturing Group. "This isn't the first time you've seen this hit the Valley."

According to Wero, tech firms sent workers home during the July 4 and Christmas holidays in 1996, when a financial slump caused bottom-line problems for technology hardware and silicon chip makers.

"Luckily, technology hasn't seen that many slumps, so you don't see this many shutdowns," said Wero, who likened the strategy to US automakers shutting down plants in the summer to retool for new models and to cut costs.

Besides shaving company utility bills, the mandated time off reduces the number of vacation days being credited to workers. Banked employee vacation days is carried as a debt on company books.

"It can help reduce a company's debt, which is nice during these times," Wero said.

But in response to a number of employee complaints, California's labor agencies are probing the practice for violations of state wage laws.

Employers argue that the forced vacation practice is nothing out of the ordinary and that the time off is simply vacation. Hearings on the practice have been slated for August.

And, coincidentally, the enforced vacations come at a time when California is again sliding into a power crisis, as another summer heat wave hits the state and power officials again issue warnings of rolling blackouts.

"Money is part of the reason we're closing down," said Dave Black, a spokesman for Network Appliance, a data storage company based in Sunnyvale, California. "But it's also a good strategy considering the state's power crisis."

"It's one of the unintended benefits of this week's shutdown," Wero said.